In a bid to mitigate inflationary expectations among businesses and the general populace, the Central Bank (CB) of Uzbekistan has unveiled a new inflation targeting mechanism. This announcement was made by Mamarizo Nurmuratov, the Chairman of the Board of the Central Bank of Uzbekistan, during the plenary session on “Monetary Policy in Current Conditions” at the XI Congress of Financiers in Kazakhstan.
Nurmuratov emphasized the evolving significance of fiscal policies and financial stability in the economic development of nations over the past few years. He underscored the importance of defining a clear strategy for economic policy and its potential consequences in regulating a country’s monetary policies. Beyond price stability, the Central Bank must focus on financial stability and consolidation, he noted.
As of October 2023, the annual inflation rate in Uzbekistan stands at 9%, aligning with forecasts. However, Nurmuratov highlighted that the core inflation rate remains above the desired level. Amid considerable uncertainty, he acknowledged the challenge of determining the lag in the impact of monetary policies on inflation and emphasized that monetary policies should not contribute to uncertainty during periods of high volatility.
The Chairman outlined heightened challenges to ensuring financial stability, including increased demand for foreign currency supported by budgetary measures and limited credit policy transmission. He pointed out that business activity in Central Asia, concentrated in rapidly profitable sectors like construction and services, fails to generate sufficient supply to meet market demand. To address this, Nurmuratov proposed expanding industrial chains in the regions.
“Given the fragmented nature of the global market, it is crucial to leverage this advantage to address the challenges of rapid and comprehensive demand satisfaction,” concluded Nurmuratov.
